Business

PARIS — Nokia has struck a 15.6-billion-euro deal to buy its rival Alcatel-Lucent to create the world's biggest supplier of mobile phone network equipment, both firms said Wednesday.

The merger of two companies that were once new technology stars but have since lost some of their lustre will produce a European champion able to take on Nokia's Swedish rival Ericsson or fierce Chinese competition.

The announcement sent shares in Alcatel-Lucent plunging 15 per cent on Paris's stock market, while Nokia's stocks were down 1.2 per cent to 7.4 euros on the Helsinki market.

Finland's Nokia said it had agreed to give shareholders in its Franco-American rival 0.55 shares in the new merged company for every one of their own.

"This transaction comes at the right time to strengthen the European technology industry," said Alcatel-Lucent boss Michel Combes. "The global scale and footprint of the new company will reinforce its presence in the United States and China." 

The two firms have "highly complementary portfolios and geographies, with particular strength in the United States, China, Europe and Asia-Pacific”, Nokia's statement said.

The new firm will go by the name Nokia, be based in Finland and be run by Nokia's current management team, it added.

The group is targeting savings of 900 million euros ($960 million) in costs by the end of 2019 without further job cuts on top of the restructuring already taking place in Alcatel-Lucent, both companies indicated.

This is likely to appease the French government, which had expressed concern about jobs disappearing in the country if the merger were to go through.

It has also in the past blocked takeovers of companies it considers national jewels.

The government caused a furore in 2013 when it blocked a bid by US giant Yahoo! to acquire Dailymotion, and then again this month when it thwarted attempts by a Hong Kong telecoms giants to acquire the video-sharing site.

Not 'losing Alcatel' 

Jean-Marie Le Guen, a member of the Socialist government, told French radio that France was not "losing Alcatel" and told employees that the government would make sure they kept their jobs.

But "they must also know that if this merger didn't happen, then maybe one day, Alcatel would not have been big enough to take on the international [market]," he said.

"If you watch the trains go by, you stay on the platform," Le Guen added.

Both companies said that the merger should save an additional 200 million euros in financial charges.

Combes told French TV channel BFM Business that the new group was committed to "increasing research and development activities in France by 25 per cent" by hiring 500 additional researchers, bringing the total research and development workforce in the country to 2,500.

"The new group's innovation and research capabilities on a global scale will be spearheaded in France," he said.

Rumours have swirled since December of a possible deal between the two firms, with France's Les Echos daily reporting on Monday that executives had been in negotiations since January.

Nokia was the world's biggest mobile phone maker for more than a decade until it was overtaken by South Korea's Samsung in 2012.

Then in 2014, Nokia sold its mobile phone and tablet division to US software giant Microsoft, and the company now develops mobile and Internet network infrastructures for operators.

Nokia is now set for a significant boost in market share. 

The deal will also help Nokia bolster its mobile infrastructure business against Swedish arch-rival Ericsson and China's Huawei, profiting from Alcatel's position as a leading supplier of 4G and LTE mobile networks and related services.

Deutsche Bank analyst Johannes Schaller said: "We see several risks for Nokia from this deal, if concluded, and believe integration could be challenging both from a product and culture perspective."

"We believe Ericsson could be the indirect beneficiary of this possible consolidation," added Schaller.

TOKYO — The head of the Organisation for Economic Cooperation and Development (OECD) on Wednesday credited a wave of loose monetary policy for preventing a global economic collapse, but warned it was now up to governments to lift growth and safeguard their economies.

Angel Gurria, secretary general of the OECD, made the comments in Tokyo where the 34-member club of rich nations was presenting its latest report on the Japanese economy.

The world owes a "debt of gratitude to central bankers" for supplying easy money that brought the global economy back from the brink after the 2008 financial crisis, Gurria said.

"They have done a great job. Without central bankers...we would be in a bigger problem," Gurria told reporters.

"But the problem is now structural changes [that] are not in the hands of central banks. Education, innovation, more competition, better regulations...These have nothing to do with central banks," he added.

While the Bank of Japan's massive monetary easing programme has boosted growth, Gurria said the country's living standards lag the OECD average and Tokyo must press on with an overhaul of the highly regulated economy, including luring more women into the workforce, shaking up a rigid labour market, and lifting productivity.

A string of central banks, including the European Central Bank, the Reserve Bank of India and the Bank of Korea, have launched monetary easing schemes or cut interest rates to prop up their ailing economies.

Meanwhile, the US Federal Reserve announced it was ending its own six-year quantitative easing scheme as the world's top economy gets back on track.

Gurria also warned that Japan had to get a handle on its massive national debt, the heaviest burden among OECD members at more than twice the size of the economy.

Tokyo raised the national sales tax in April 2014 to 8 per cent from 5 per cent to help pay down that debt load, but the move slammed the brakes on growth and sent the economy into a brief recession.

Prime Minister Shinzo Abe delayed a second tax rise to 10 per cent scheduled for this year, but that rate is still only about half the OECD average of 20 per cent, Gurria said.

A day after the International Monetary Fund raised its growth projections for Japan, the OECD on Wednesday hiked its forecasts to a 1 per cent expansion this year and 1.4 per cent next, up from an earlier 0.8 per cent and 1 per cent, respectively.

Abe launched his economic growth blitz in 2013, dubbed Abenomics, combining huge monetary easing, big government spending and promises to overhaul Japan's economy.

But there is still a lot of work to do on the so-called third arrow of his plan — reforms.

"The third arrow of Abenomics is its most crucial component, without which the unprecedented monetary expansion and the fiscal effort will not succeed in putting Japan on a path to faster growth and fiscal sustainability," the OECD's report said.

Separately, latest OECD data showed growth momentum is strengthening in the eurozone, while China's economic expansion is slowing.

"In Italy and France, the signs of a positive change in momentum, which were assessed as tentative in March, have now been confirmed," the OECD said in a statement.

The OECD's composite leading indicators (CLIs), designed to anticipate turning points in economic activity, also showed a positive change in momentum for Germany.

The figures will come as a relief to the European Central Bank, which recently launched a 1.1-trillion-euro ($1.2-trillion) bond buying programme to boost sluggish growth and ward off deflation.

Of particular concern have been France and Italy, the eurozone's second- and third-largest economies, which have been stagnating.

In Italy, which saw its economy contract 0.3 per cent last year, the government is forecasting 0.7 per cent growth this year.

France's government is forecasting 1 per cent growth this year, after a meagre 0.4 per cent expansion in 2014.

The Paris-based organisation which provides economic analysis and advice to its 34 industrialised country members, said the growth outlook was stable in the OECD area as a whole as well as for the United States, Britain and Japan.

Meanwhile, "CLIs signal growth easing in China and Canada, albeit from relatively high levels”.

China, not an OECD member, has been a major source of global growth, but the world's second-largest economy has been experiencing a broad slowdown in recent years. 

Purchasing manager surveys, one leading indicator, have recently shown Chinese manufacturing steady, while official data released earlier this month showed output, retail and investment growth have all fallen to multi-year lows.

China's economy expanded 7.4 per cent last year, the worst result since 1990, and earlier this month leaders lowered this year's target to approximately 7 per cent.

For other emerging markets, the CLIs point to slowing growth momentum in Brazil and Russia, and firming growth in India.

AMMAN –– Jordan Chamber of Industry (JCI) and the Islamic International Arab Bank (IIAB) on Tuesday signed a memorandum of understanding to boost cooperation between the two organisations.

The agreement, signed by JCI Director Maher Mahrouq and IIAB Chief Business Officer Mohsen Abu Awad, seeks to facilitate Islamic financing to the industrial sector, particularly small and medium-sized establishments.

Abu Awad said the bank is targeting the industrial sector through a variety of financial products that are based on the provisions of Islamic Sharia.

LONDON — British Conservative Prime Minister David Cameron launched his party’s manifesto on Tuesday, promising a return to the “good life” and the revival of a housing policy associated with Margaret Thatcher if he wins May’s election.

Cameron announced an extension of the 1980s “right-to-buy” housing policy of Conservative “Iron Lady” Thatcher, revealed plans for free childcare and pledged that minimum-wage workers will pay no income tax.

With opinion polls putting the centre-right Tories neck-and-neck with the opposition Labour Party, he tried to play on Labour’s weak reputation on the economy in a bid to put his side ahead in the last few weeks of campaigning.

“We’re on the brink of something special,” he told activists at a school in Swindon, southwest England. “Let’s not let Labour drag us back to square one.”

“We can turn the good news in the economy into a good life for you and your family. Britain can be this buccaneering, world-beating, can-do country again,” the prime minister said.

The Conservatives blame Labour for running up a budget deficit of some £90 billion (124 billion euros, $130 billion) during 13 years in government before they were voted out in 2010 and replaced by a Tory-Liberal Democrat coalition.

Neither main party looks set to win an outright parliamentary majority on May 7, raising the prospect of another coalition or a minority government.

Iconic Thatcherite policy 

The “right-to-buy” scheme will extend home purchase discounts already enjoyed by some tenants to 1.3 million more tenants of housing associations, private non-profits that provide low-rent accommodation that often receive public subsidy.

“Conservatives have dreamed of building a property-owning democracy for generations, and today I can tell you what this generation of Conservatives is going to do,” Cameron said.

Aimed at tackling Britain’s housing crisis, a hot political issue as house prices and rents soar, the pledge will extend an iconic policy first introduced by then prime minister Thatcher in 1980 and popular with aspirational lower income voters.

Critics claim the original “right-to-buy” policy fuelled Britain’s housing crisis by reducing the amount of affordable housing available.

But Cameron insisted this would not be the case this time as his plan would require each property sold to be replaced on a one-for-one basis.

Liberal Democrat leader and Deputy Prime Minister Nick Clegg said the policy was a “measure of how the Conservatives have run out of ideas”.

“It is not affordable and the figures do not add up,” he added. 

‘Unfunded promises’?       

At the manifesto launch, the prime minister also announced two other key policies.

Facing accusations that his party serves only the rich, Cameron unveiled plans which would mean no one working 30 hours a week or less on the minimum wage, currently £6.50 an hour, would pay tax.

His announcement came the day after centre-left Labour’s leader Ed Miliband promised to increase the minimum wage and again promised to end “zero-hours contracts”, which guarantee no minimum number of work hours.

Miliband dismissed Cameron’s claims that the Tories were the “party of working people”, saying they only looked after “the richest and most powerful in our society”.

Cameron also announced plans to provide 30 hours of free childcare a week, which he claimed would save families £5,000 a year.

But the Conservatives faced criticism that they had not revealed how they would fund their promises.

Paul Johnson, director of respected think tank Institute for Fiscal Studies (IFS), told the BBC: “We got a very clear sense that the Conservatives are going to have to do an enormous amount over the next three or four years, but almost no sense at all about actually how they are going to do it.”

Separately, a survey published by accountancy firm Deloitte on Tuesday showed that British companies are chiefly concerned about uncertainties over next month’s general election leading to caution over investment.

Deloitte released its findings from a quarterly survey of 108 chief financial officers (CFOs), including those at 21 companies listed on the FTSE 100, who listed their top risks to the outlook.

“Uncertainty over post-election policy change represents the greatest threat to UK business according to the chief financial officers of the UK’s largest companies,” Deloitte said in a report.

The group added that a net 53 per cent of executives are expected to increase capital expenditure over the next 12 months.

That contrasted with a peak of 80 per cent at the same stage one year ago.

“CFOs think the general election poses risks to what is seen as a benign policy environment,” Deloitte indicated. “A clear majority of CFOs see the potential for adverse changes on regulation and taxation. And, on balance, the expectation is that post-election changes will be negative for fiscal, monetary and labour market policies.”

The second biggest risk, according to the survey, was uncertainty surrounding a future referendum on Britain’s membership of the European Union.

Deloitte added that the third biggest risk was given as deflation and economic weakness in the eurozone — and the possibility of a renewed eurozone crisis.     

PARIS — Growth in emerging markets will slow for a fifth consecutive year, the International Monetary Fund (IMF) said Tuesday, as exchange rate swings and oil prices plunge, and China’s economic growth slows.

The IMF expects the emerging markets to post growth of 4.3 per cent in 2015, down from 4.6 per cent in 2014 and 5 per cent in 2013.

“In emerging markets, negative growth surprises for the past four years have led to diminished expectations regarding medium-term growth prospects,” the IMF said.

The slowdown, if not outright contractions, is evident in most of the major emerging markets, known as the BRICS. 

Only India and South Africa are expected to see growth increase this year. Brazil and Russia are to contract.

Meanwhile growth is to slow in China, which has been the driver of global growth in recent years.

The IMF expects the expansion of the Chinese economy to slow from 7.4 per cent last year to 6.8 per cent this year and 6.3 per cent next year.

“The gradual slowdown in China and the partly related decline in commodity prices [which also reflected a sizable supply response] weakened the growth momentum to some extent in commodity-exporting countries and others with close trade links to China,” the fund said.

Oil, greenback big risks       

Although the IMF, which is holding its twice-annual meeting this week in Washington, expects emerging market growth to rebound to 4.7 per cent next year, it remains concerned about the risks that sharp changes in currency exchange rates and oil prices could act as a drag.

While oil prices have fallen by around half since hitting a peak last June, that is not universally good news for emerging countries, particularly oil exporters facing other economic difficulties like Russia and Venezuela.

The drop in other commodity prices will hurt in particular Latin America and the Caribbean region, which is heavily dependent on exports of raw materials. The IMF now expects the region will muster only 0.9 per cent growth this year, down from the 1.2 per cent growth it had forecasted in January.

The rise of the dollar against emerging market currencies complicates the situation as many have debts denominated in dollars.

“There are balance sheet and funding risks, especially in emerging market economies, if dollar appreciation continues,” the IMF report indicated.

Another worry is US monetary policy. 

The US Federal Reserve is nearing a first hike in policy interest rates from the near zero levels they have been stuck at for years. Market interest rates have been increasing in expectation, which could provoke a shift of investment funds.

“Emerging market economies are particularly exposed: they could face a reversal in capital flows, particularly if US long-term interest rates increase rapidly, as they did during May-August 2013” when several countries faced difficulties, the fund said.

This time around, with the sharp fall in oil prices, oil exporters are more vulnerable while importers have better buffers.  

IMF wants reforms       

“Several years of downgraded medium-term growth prospects suggest that it is also time for major emerging market economies to turn to important structural reforms to raise productivity and growth in a lasting way,” added the fund, which has regularly called on countries to take steps to improve performance. 

The IMF identified three priority areas: improving infrastructure, notably to remove bottlenecks in the power sector; easing limits on trade and investment and improving business conditions; and raising competitiveness and productivity through reforms to education, labour and product markets.

“In India, the post-election recovery of confidence and lower oil prices offer an opportunity to pursue such structural reforms,” the IMF said.

It upgraded its forecasts for India, which it now sees expanding by 7.5 per cent this year and next, after having grown by 7.2 per cent last year.

South Africa’s growth is expected to pick up from 1.5 per cent last year to 2 per cent, but that forecast has been trimmed by 0.1 percentage points from the last forecasts in January.

The IMF said it sees Russia’s economy, hit hard by the fall in oil prices and Western sanctions over the Ukraine crisis, contracting by 3.8 per cent this year, worse than the 3 per cent it forecast in January.

The fund also switched its forecast for commodity exporter Brazil from growth to a contraction of 1 per cent this year. 

In its latest World Economic Outlook report, the IMF hiked its eurozone growth forecasts but warned the outlook was fragile, with the Ukraine crisis and uncertainty over Greece’s future in the single currency bloc adding to concerns.

“A Greek crisis cannot be ruled out, an event that could unsettle financial markets,” IMF chief economist Olivier Blanchard warned.

But while “an exit from the euro would be extremely costly for Greece, extremely painful... the rest of the eurozone is in a better position to deal with a Greek exit”, he said.

“It would still not be smooth sailing but it could probably be done,” he added, stressing economy and governance reforms adopted since the debt crisis to put the euro on a sounder base.

According to the latest World Economic Outlook report, the 19-nation bloc is meanwhile getting a boost from lower oil prices, record low interest rates and the European Central Bank’s (ECB) massive stimulus programme.

“There are signs of a pickup and some positive momentum in the euro area, reflecting lower oil prices and supportive financial conditions but risks of prolonged low growth and low inflation remain,” the IMF said.

The eurozone should grow 1.5 per cent this year, up from the 1.2 per cent estimated in January, gaining 1.6 per cent in 2016, up from 1.4 per cent.

This is a solid improvement but still well short of the IMF’s global growth estimate of 3.5 per cent for this year and 3.8 per cent next.

Consumer prices meanwhile are expected to edge up a minimal 0.1 per cent this year and by a still historically low 1 per cent in 2016, the IMF said.

The ECB has an annual inflation target of just under 2 per cent.

The economy grew 0.9 per cent in 2014, recovering in the last quarter from a soft patch which had stoked fears of deflation, when prices fall outright prompting consumers to put off purchases, which in turn weakens demand and undercuts activity.

“The priority is to boost growth and inflation through a comprehensive approach,” the IMF indicated, citing the ECB’s stimulus measures, changes in tax policy to favour investment, structural reforms and strengthening the banks to put the economy back on track after the upheavals of the debt crisis.

The focus has to be on investment and jobs in an effort to get the economy growing, it said.

Investment, jobs priority       

The ECB has cut interest rates to record lows but the banks remain reluctant to lend to business, preferring instead to repair the debt crisis damage to their balance sheets as the authorities press them to bolster their capital reserves.

The ECB has also begun a “quantitative easing” or QE programme to pump more than 1 trillion euros ($1.1 trillion) into the economy through to next year to stimulate credit and demand.

The IMF described the QE programme as “decisive”, larger than expected and a welcome stimulus given the wider weaknesses in the economy.

“Both core and headline inflation have been well below the ECB’s medium-term [target] for some time, with headline inflation turning negative in December,” the IMF said, although the move appears to have “stalled the decline in inflation expectations”.

Additionally, it has weakened the euro which should boost exports if for the moment there is little prospect of a strong turnaround.

“The medium-term outlook of modest growth and subdued inflation in the euro area is driven largely by crisis legacies, notwithstanding the positive effects of the ECB’s actions,” the IMF said.

“High real debt burdens, impaired balance sheets, high unemployment and investor pessimism about prospects for a robust recovery will continue to weigh on demand,” it indicated.

“Uncertainty and pessimism regarding the euro area’s resolve to address its economic challenges are likely to dampen confidence,” it said.

The continued crisis in Ukraine plus an agonising renegotiation of Greece’s debt rescue programme will weigh on sentiment too, adding to the downside risks posed by persistently low inflation.

“Economic shocks, from slower global growth, geopolitical events, faltering euro area reforms, political and policy uncertainty, and policy reversals, could lower inflation expectations and trigger a debt deflation dynamic,” the IMF concluded.

MANCHESTER, United Kingdom — Opposition leader Ed Miliband insisted he was ready to be Britain's next prime minister as he launched a manifesto Monday designed to boost his party's reputation on the economy before the May 7 election.

Miliband sought to reassure voters that his centre-left Labour Party would manage the economy responsibly while outlining "a plan to change our country" by handing more wealth to low and middle income families.

Labour has been virtually tied with Prime Minister David Cameron's Conservatives in opinion polls ahead of next month's general election which looks set to yield another coalition or minority government.

But with 24 days to go, the economy remains one of the party's main weak spots and polling suggests voters trust Labour less on the issue than the centre-right Conservatives.

Labour's record on the economy while in government between 1997 and 2010 under Tony Blair and Gordon Brown is also frequently attacked by the Conservatives, who blame the party for running up a budget deficit of some £90 billion (124 billion euros, $130 billion).

"I'm ready. Ready to put an end to the tired old idea that as long as we look after the rich and powerful, we will all be OK," Miliband told activists during a speech in Manchester, northwest England. "I know Britain can be better."

'Like an alcoholic
with vodka' 

Labour is promising to cut the deficit every year until it is eradicated, although it has not said exactly when this will be. 

It is also detailing how each manifesto pledge will be paid for, with no extra borrowing.

The Conservatives said Miliband's plan lacked credibility while the leader of the Liberal Democrats (lib Dem), junior partners in Cameron's coalition government, compared Labour's relationship with debt to an alcoholic's with vodka.

"The Labour Party saying they have no plans for additional borrowing is like an alcoholic who consumes a bottle of vodka every day saying they have no plans to drink more vodka," Lib Dem leader Nick Clegg told reporters. "It's a dangerous addiction."

Clegg later insisted he had not intended to "cast aspersions on people who are grappling with alcoholism".

Labour says its plans for reducing the debt would hurt ordinary, middle-income families less than the cuts to public services announced by Cameron's Conservatives, who have been in power as the coalition's senior partners since 2010.

Instead, it intends to make wealthier taxpayers shoulder more of the burden through policies such as the "mansion tax", which would hit homes worth £2 million or more, and increasing income tax for those earning more than £150,000 a year.

Trouble in Scotland 

Some business leaders warn that a Labour government could damage Britain's economic recovery.

Earlier this month, over 100 signed an open letter backing the Conservatives, including some who had previously backed Labour under Blair and Brown, who took a more business-friendly approach.

Commentators say Miliband, who has struggled with a geeky public image since defeating his brother David to become Labour leader in 2010, has turned in some strong personal performances on the campaign trail.

But his hopes of moving into Downing Street after the election could be dashed by an expected collapse for the party in Scotland, one of its traditional strongholds, due to surging support for the Scottish National Party (SNP).

The pro-independence SNP is expected to take the majority of Scottish seats and its leader Nicola Sturgeon is talking up the prospect of a post-election deal with Labour to prop it up in a minority government.

SINGAPORE — East Asia's developing economies led by China will grow slightly slower this year, with higher US interest rates and an appreciating dollar posing further risks to the region, the World Bank said Monday.

In its latest forecasts for the region, the bank said China's economy should expand by 7.1 per cent in 2015, slower than the 7.2 per cent rate projected in October and down from last year's 7.4 per cent growth.

Developing East Asia should grow 6.7 per cent, easing from 6.9 per cent in 2014, the World Bank added in the latest edition of its East Asia Pacific Economic Update.

Under the bank's definition, Developing East Asia includes 14 countries.

"Despite slightly slower growth in East Asia, the region will still account for one-third of global growth, twice the combined contribution of all other developing regions," Axel van Trotsenburg, World Bank East Asia and Pacific regional vice president, said in a statement.

Slower growth in China is likely to temper the positive effects of lower oil prices and a recovery in developed countries, but the bank said economies should take advantage of the oil price fall to push through fiscal reforms aimed at raising revenues such as cutting fuel subsidies.

"In China, engineering a gradual shift to a more sustainable growth path will continue to pose challenges for policymakers, given real sector weaknesses and financial system vulnerabilities," the bank said, adding that reforms "will depress activity in the short term".

The bank slashed its forecast for growth in the Philippines to 6.5 per cent this year from its October estimate of 6.7 per cent, but this is still higher than last year's 6.1 per cent expansion.

Indonesia growth

For Indonesia, 2015 growth is expected to come in at 5.2 per cent, slower than the bank's previous estimate of 5.6 per cent but still stronger than last year's 5 per cent expansion.

Thailand's economy is likely to mount a strong rebound and grow at 3.5 per cent this year from just 0.70 per cent in 2014 as greater political stability perks up consumer spending and investments.

But the bank said growth for Malaysia, Southeast Asia's largest oil exporter, will slow to 4.7 per cent from 6 per cent last year as the country feels the pinch from depressed crude prices, while a goods and services tax implemented this month will affect consumption.

Malaysian growth will pick up to 5 per cent in 2016, it said.

"East Asia Pacific has thrived despite an unsteady global recovery from the financial crisis, but many risks remain for the region both in the short and long run," said the bank's chief economist Sudhir Shetty.

Among the risks is a downturn in the eurozone and Japan, two of the region's top export markets, the bank said.

It also warned that higher US interest rates and an appreciating dollar "could raise borrowing costs, generate financial volatility and reduce capital flows" to the region.

The Federal Reserve is split on when to raise ultra-low US interest rates, with timing scenarios ranging from June this year to sometime in 2016, according to minutes of its last policy meeting released last week.

ISTANBUL — Turkish President Recep Tayyip Erdogan dreams of transforming Istanbul into a financial hub that can rival Dubai or Singapore, but first he needs to win over would-be investors like Ali Bahcuvan.

"I'd rather stay away from the stock market these days," said the 41-year-old internet entrepreneur. "The cost of trading has increased and that has hurt liquidity. The stocks I want to trade are all illiquid."

Market participants say interest from small investors is on the wane, thanks to higher fees and as new flotations fail to spark interest.

That's bad news for an exchange that relies on retail investors for much of its liquidity. It also raises questions about the viability of the government's drive to make Istanbul a global top-10 financial hub.

Years of solid growth have turned Turkey into a major emerging economy, but its equity market has not kept up.

The government has already introduced some regulatory changes to make Istanbul more attractive for foreign capital, including an ambitious plan to build a $2.6 billion "International Finance Centre".

But investors say more needs to be done, especially given flagging growth and nagging political worries ahead of June parliamentary elections.

"Right now, Turkey is — without much doubt — not one of the favourite emerging markets," said Mike Harris, Turkish strategist at Renaissance Capital. "That also enhances the challenge for Istanbul to be perceived as a financial centre because the economy is going through these doldrums."

Ankara needs to encourage more public listings, more equity issuance and more "truly public" companies, analysts say, especially since many listed firms are still controlled by the government or their founding families.

Erdogan has hardly helped investor sentiment, fulminating against high interest rates in comments which have raised concerns about the independence of the central bank.

Political worries 

"Valuations are attractive but there are uncertainties regarding the management of the economy after the elections," said Didem Gordon, chief executive of Ashmore Portfoy, an asset manager.

This year should have been "spectacularly positive" for Turkey because of the lower oil prices, Gordon added, but emerging market volatility and domestic politics have weighed on the markets.

At around $220 billion, Istanbul's stock market is the world's 29th largest, well behind some emerging market rivals. The Johannesburg market is worth more than four times that, even though South Africa's economy is less than half the size of Turkey's.

"There is a mismatch between the complexity and size of the Turkish economy and the size of its capital markets," consultancy Oliver Wyman said in a 2014 report, adding that the equity market could easily double in size.

Trade is concentrated on just a handful of companies, with just ten stocks accounting for 70 per cent of transactions. Many smaller companies aren't liquid enough to draw investors.

Retail investors account for 80 per cent of the trade on Borsa Istanbul, but their numbers have thinned after the bourse, which plans to list by next year, hiked its fees. Brokerages are also charging more to offset new capital requirements.

"There has been a significant increase in fees that have hit both brokerages and investors," said Metin Ayisik, the head of Turkey's brokerage industry group.

Last year, Istanbul's investor base shrank by 5 per cent to around 1 million investors, he added, noting that the bourse needs around five times that to ensure liquidity.

Istanbul is also hobbled by a buy-side industry which is small, even by emerging market standards. By contrast, South Africa has scores of money managers centred in Cape Town.

According to Oliver Wyman, Turkey could build up the buy-side industry by encouraging the engines of the economy, small and medium-sized companies, to go public.

There have been some positive signs, such as recent government incentives for retirement savings, which have boosted demand for private pension funds. But the government still needs to do more to encourage savings.

"A lot needs to change in terms of creating a strong domestic pool of assets, because then companies come to where the savings are, assuming the regulation is supportive," said Renaissance Capital's Harris. "The perception of Turkey can change on a dime if the policy makers aggressively embraced reforms."

AMMAN — 129 projects in Irbid were supported by the Jordan Enterprise Development Corporation (JEDCO) which extended them over six years  a total of JD11 million in financing within a total investment volume reaching JD19.77 million. Provided through the Governorate Development Fund, service and industry support programmes and business incubators, JEDCO expects the schemes to provide 1,001 job opportunities after completion. According to a JEDCO statement, the corporation supported establishing 88 new projects with a total funding of JD8.76 million within an investment volume of JD15.22 million, expecting a total of 710 new jobs to be created. As for developing or expanding current projects, JEDCO provided JD2.39 million to 41 schemes, with a total investment volume of JD4.55 million, expecting them to generate 291 new jobs, the statement added.

AMMAN — The number of guests who stayed at Sheraton Amman Al Nabil Hotel dropped last year to 73,462 persons, representing a 61.89 per cent average occupancy rate.

According to the annual report of Al Dawliyah for Hotels and Malls, the company that owns the hotel, average occupancy rates were as high as 71.37 per cent in 2012 and 71.53 per cent in 2010 when the number of guests totaled 87,499 persons and 85,372 persons respectively.

Illustrating diminished performance, the report indicated that that the hotel's net operational income regressed to JD5.5 million last year from JD6 million in 2013 due to lower earnings, which fell to JD16.3 million from JD16.7 million, and slightly higher operational costs which reached JD10.7 million in 2014.

The report showed that the room rate last year was slightly lower at JD162.45, down from JD163.8 charged in 2013. In 2010, the rate was JD140.98.  

Al Dawliyah Chairman Nadim Muasher told the shareholders in a foreword that specialised independent parties, comparing 12 5-star hotels in Amman, positioned Sheraton Amman Al Nabil Hotel's occupancy rate at 63.33 per cent compared to the 62.97 per cent general average and the room rate at JD158.7 compared to the JD118.63 general average.

The findings also showed a 40 per cent gross operational profit at the hotel compared with a 32 per cent general average.  

Muasher described the hotel's performance as acceptable when seen in the context of troubled and unstable regional conditions.

"It was another difficult year for the hotel industry," he said of 2014. "Despite the stability Jordan enjoys, the distressing regional developments had a great negative effect on the Kingdom's tourism sector."

"Even with reassurances that surface here and there, Jordan Tourism Board statistics showed that the number of one-day tourists dropped by 7 per cent, those of tourist groups regressed by 5 per cent, and the number  of European and Arab visitors declined by 4.4 per cent and 4.9 per cent respectively compared to 2013 levels," the chairman added.

According to Muasher, a phenomenon emerged when, on several occasions,  tourists and individuals cancelled reservations, and businessmen scrapped conferences and meetings in reaction to news of regional disturbances and threats.

He noted that the Dead Sea, Petra and Aqaba hotels were more bruised than all the 5-star hotels in the capital from the negative effects that befell the hotel industry.

In the foreword, the chairman mentioned higher electricity charges and other annual inflationary costs, in terms of salaries to 367 employees and procurements, as factors that sapped the gross profit.

"Electricity was one of the operational costs' most significant challenges  because higher charges overburdened us by around JD200,000," he wrote.

Muasher pointed out that the 267-room hotel paid JD1.76 million for its electricity consumption in 2014 compared to JD1.25 million in 2011, and that the  annual bill will become about JD2.5 million in 2017 if higher charges take place until then.

He said that, because the hotel sector could not absorb the higher costs through increasing room charges or occupancy rates, the company is almost ready now to start building a station to generate electricity from solar energy at a cost of around JD5.2 million.

Financially, Al Dawliyah was able to reduce its indebtedness to JD2.9 million at the end of last year from JD7.1 million in 2006, and the company expects to repay its current financial obligations to banks by the end of this year.

The balance sheet as of December 31, 2014 shows JD58.3 million in total assets, mostly property and equipment.

The assets include JD5.9 million in various investments that comprise land, buildings and shares.

With a JD43.2 million capital, Al Dawliyah's shareholders equity includes JD10.8 million in mandatory reserves and JD3.1 million of retained earnings.

According to the 2014 profit and loss statement, Al Dawliyah's net pretax profit amounted to JD2.7 million compared to JD2.9 million in 2013.

Besides the lower operational income, the report attributed the decline in net profit to the drop in the value of shares listed on the Amman Stock Exchange.

"Although the shares owned by the company are considered strategic and distinguished with a good annual return, their market value went down obliging us to take JD310,000 diminution from the dividends payable.

As such, shareholders voted this week approving the distribution of JD2.8 million as cash dividends at a rate of 6.5 per cent. In 2013, the cash dividends amounted to JD3.02 million distributed to shareholders at a rate of 7 per cent.

"We look forward to adding facilities to the hotel in order to create extra resources of income and prepare it to compete with new hotels that are expected to operate in Amman during 2015 and 2016," Muasher concluded his address.

Two new hotels are expected to start this year, and four others next year.